Uncertainty about how quickly the Fed will increase US interest rates, coupled with escalating geopolitical tensions over Ukraine, meant we had another extremely volatile (and dizzying) week as we experienced a number of very big back-and-forth intra-day movements.
For example, on Monday 24 January 2022, you would be forgiven for thinking it was a fairly unremarkable day given the US S&P500 index ended the day up just over 0.25%. However, given the index was down 4% at one point during the day, it actually ranks as one of the biggest market turnarounds in history!
Likewise, on Tuesday, the index was down 2.8% shortly after it opened, then made a full recovery only to give it up and end the day down over 1.2%. The early gains we saw on Wednesday (2.2%) and yesterday (1.8%) turned into a loss by the time the market closed, while today’s early losses (0.8%) reversed and then some, with the index ending the day up 2.43% – and in turn helping the index close the week with a gain of 0.77%.
This week’s Fed monetary policy meeting was important given how quickly and significantly interest rate expectations have changed since policymakers last met in mid-December.